How do contracts work in pro sports

[Luckyflux]

I am a big sports fan but I have no knowledge of how the pro contracts work in regards to being released with time and money left on a contract.

For example, Thomas Jones is going to be released soon. According to the news report, it said that Jones has one year left on his contract at about 2.3 million. I am not sure if the numbers are accurate, but that isn't the point.

So if the Jets release Jones, what happens to the contract? Does he still get paid the 2.3 mil? If not, then what is the point of the contract?

How does a team save money if they release someone with time left on their contract? They don't have to pay that person?

So if a player has time and money left on his contract and the team he plays for releases him, what happens to the money?

 

[Canadave]

Most leagues allow contracts to be bought out—that is, the player gets paid a lump sum and that's that. It's generally less than their total remaining salary, but it's still a financial hit and (at least in the NHL, I don't know about other leagues) it still counts against a team's salary cap. Still, sometimes it's better than holding on to a seriously underperforming player.

 

[firehawk12]

The NFL does not have guaranteed contracts. That means if a player is dropped, that's it. They don't get anything else from the team.

It's why the NFL may have a lockout coming in the next few years.

 

[Yoda]

One thing about the current NFL contracts, typically there will be a 'signing bonus' which is guaranteed money. The signing bonus is often a pretty significant part of the overall part of the contract. So let's say you sign free agent bust #1 for 20 million dollars for three years, and give him 8 million of that as a signing bonus, and for simplicity's sake you pay him 4 million a year in salary then he'll make 12 million over the first year. If you cut him after that first year you don't pay him any more money, but his 'cap number' isn't quite the same. So that 8 million dollar signing bonus will count against the team's salary cap at about 2.7 million dollars all three years Year one would have a cap number of 6.7 million, even though he really made 12 million the first year. So you'll have 2.7 million in 'dead' money on the cap for the two years he's gone to catch up so to speak. You already paid that to him right when he signed, but it limits your ability to sign other players in the future.

Of course, we're headed straight at an uncapped year, so I suppose that dead money won't mean shit for next year unless they work something out. And who knows what they will eventually work out. As I understand it the NFL wants to drastically cut the percentage of revenues that goes to the players. So, they're either stingy, or they gave up too much during the last agreement, but either way it's hard to get someone to take a paycut once you give them that extra money. Anyway, you'll know if something's been worked out if the... 2011 season happens

 

[Hermiod]

In professional football (as in proper football, not that bad version of Rugby with body armour), there are various legal rulings that affect player contracts. These were largely made in the European Union but FIFA has implemented them globally to ensure that everyone is on a level playing field, so to speak.

Players over the age of 23 (I believe) can unilaterally buy out their own contracts. They cannot, however, have had any prior discussion with another team as this is still considered an illegal approach. In other words, another team cannot just give a player the money to buy out his own contract.

Players in Spain are required to have a minimum fee release clause in their contracts. This means that if another team is willing to meet that clause, their current club has no right to say no. Spanish teams get around this by agreeing extraordinarily large fees well above the perceived transfer value of the player - the world's most expensive player, Real Madrid's Cristiano Ronaldo - has a clause worth several hundred million euros.

Typically, when a player is under contract in football, a team that wishes to buy him must agree a transfer fee with his current club. Players cannot talk to other teams about transfers until after his current club has given them permission, unless they are within the last six months of their contract, at which point they are free to negotiate as they please.

The transfer fee can be anything the two club's agree upon. It will not necessarily be a lump sum - it could be paid in installments, it could have clauses saying the selling club gets more money if the player reaches certain targets (appearances, goals, plays for his country etc) or it might have a clause entitling the selling club to a share of the fee if his new club sells him on.

 

[Scout101]

Totally different depending on the sport. NFL rules have been pretty well described, NBA and NHL have buy-out deals they can do, and MLB is totally in the player's favor, with guaranteed contracts, meaning if you sign for 40 million over 5 years, you're getting 40 million (unless you retire during the deal). Doesn't matter if you get hurt in spring training and never throw a pitch, you get the money. Can cut the player if you want, but the money is spent.

 

[Roger Wilco]

{snip}

Basically in short you could say that in Europe contracts in pro sports work exactly the same way is in any "normal" business. Special rules and exception etc have been abolished by the EU for the most part.

 

[Hermiod]

{snip}

Basically in short you could say that in Europe contracts in pro sports work exactly the same way is in any "normal" business. Special rules and exception etc have been abolished by the EU for the most part.

For the most part, yes, but there are still some unusual issues. For instance, I don't think if a non-footballer changes jobs the university that taught him would get a small compensation fee.

 

[Yoda]

In professional football (as in proper football, not that bad version of Rugby with body armour)

 

[Hermiod]

In professional football (as in proper football, not that bad version of Rugby with body armour)

All you had to do was give your sport a different name. We were first, live with it.

 

[Roger Wilco]

The history of football is a little more complicated than that.

 

[Hermiod]

The history of football is a little more complicated than that.

The history of the naming of football isn't that complicated. Football became a sport with an organised set of rules in 1863.

The American sport was not even played until 1869.

 

[Roger Wilco]

But the American version is probably closer to "traditional" forms of football than our version. And at that time the name "football" defininately wasn't exclusive in that way. Why do you think many old clubs in England are called "AFC"? Because other football codes - including rugby - already existed and the association football clubs had to make it clear what they were about. Basically it all happened at the same time and it's difficult to say what came first.

 

[Yoda]

Really? That's your claim on the word? Shit that independently went down in the 1860s? Our civil war was probably just a ruse so you'd be distracted while we stole your word and developed our game in secret!

BTW, we're going to call 'em french fries instead of chips, and we're going to call 'em chips instead of crisps whether you like it or not.

 

[Chaos Descending]

The history of football is a little more complicated than that.

The history of the naming of football isn't that complicated. Football became a sport with an organised set of rules in 1863.

The American sport was not even played until 1869.

The game you reference as being played in 1869 was virtually the same as "soccer" anyway.

Also:

Harvard University was already playing a type of "football" as early as 1827.

The manufacture of inflatable footballs in the United States was underway by 1855.

The first "organized" team was formed in 1862.